Imperial Oil: Petroleum Politics in the Nigerian Delta and the New Scramble for Africa

Anna Zalik and Michael Watts explain why being "oil rich" has become a curse on the poor of Nigeria and Angola.

The new scramble for Africa strikingly resembles the gun boat diplomacy and violence of the late nineteenth century. And the violence in the Niger Delta arises from a context in which oil industry policies have encouraged competition among local residents for the meagre payments associated with corporation activities on their land and waterways. Africa is experiencing a major oil boom. The continent accounts for roughly 10 percent of world oil output, and 9.3 percent of known reserves. Over the last decade it has emerged as a strategic supplier to the US market. There are twelve major oil producers in Africa but four states (Nigeria, Algeria, Libya and Angola) account for 85 percent of African output. The Gulf - constituted by the so-called West Africa 'Gulf States' from Nigeria and Angola - has emerged as the key African supplier to an increasing volatile world oil market. It is the Gulf that represents the new frontier for both US energy policy and the transnational oil companies.

Transnational oil interests have also sought concessions in Sudanese territory. Participants include Qatar's Gulf Oil, Canada's Talisman, Sweden's Lundin oil and most importantly France's TotalFinaElf and the Chinese National Oil Company. With growing attention to human rights violation in regions like Chad and Darfur, the offshore region of the West African Gulf of Guinea, is seen as relatively less contentious. This region, identified as the new Persian Gulf, could receive $40 billion in investment by 2012 according to the petroleum industry, and the National Intelligence Council has stated that the significance of West Africa to US energy supplies may rise from 16 percent to 25 percent by 2015. The quotas imposed by OPEC, and wars in the Middle East and elsewhere are keeping oil prices high and benefit the oil multinationals as much as they do the OPEC states.

It is hardly any surprise that the US Council of Foreign Relation's call for a new approach to Africa turns on Africa's "growing strategic importance" for US policy. At the heart of their recent report, More Than Humanitarianism, is a focus on sub Saharan Africa as a key source in US oil imports, the growing role of China in the African oil and gas industry and, of course, Africa as the new frontier in the fight against 'terror' and revolutionary Islam. As the Northern powers and multinationals seek to plunder African resources, local violence follows. In the last two months the oil producing Niger Delta region in Nigeria has tottered on the edge as insurgents have demonstrated the ease with which they can disrupt oil supplies when spare capacity in the world oil market is low. What is true for Nigeria is no less the case for the Gulf of Guinea oil region. Political instability and social turbulence are the lived realities of Gabon, Equatorial guinea, Sao Tomé and Angola.

All of the major African oil producers are highly oil-dependent. Among the top six African oil states, oil export revenues account for between 50 and 80 percent of all government revenues. Until the 1970s North Africa dominated production of oil and gas on the continent but the focus has moved to the Gulf of Guinea over the past three decades. Today Nigeria and Angola dwarf other African producers accounting for nearly 4 million barrels per day and almost half of Africa's output. US oil companies have invested $40 billion in Africa over the last decade (and another $30 billion is expected between 2005 and 2010); oil investment now represents over 50 percent of all foreign direct investment in the continent.

It is Nigeria, however, that draws the most attention from US strategists and oil industry alike. One of every five Africans is a Nigerian - the country's population is currently estimated to be 137 million - and it is the world's seventh largest exporter of petroleum. But oil-fuelled capitalism in Nigeria and the massive petro-wealth (perhaps $400 million over the last thirty years) has brought ruin and degradation. Over the period 1965-2004, the per capita income fell from $250 to $212. Between 1970 and 2000 in Nigeria, the number of people subsisting on less than one dollar a day grew from 36 percent to more than 70 percent, from 19 million to a staggering 90 million.

The contradictions of oil in Nigeria are nowhere greater than on the oilfields of the Niger Delta - in the oil rich Bayelsa, Rivers and Delta states there is one doctor for every 150,000 inhabitants. Oil has wrought only poverty, extraordinary state violence (of which the military assault on the Ogoni people and the hanging of Ogoni novelist Ken Saro-Wiwa in 1995 is only one small part) and a dying ecosystem. In 2005, Ike Okonta noted that the government's presence "is only felt in the form of the machine gun and jackboots". Not surprisingly, Nigeria has seen rising violence in the Deltan oil producing communities. The failure of peaceful movements led to rising discontent and militancy, particularly among unemployed youth marginalised from the oil wealth in their midst. Local communities have mobilized to make demands on both companies and the Nigerian state for a greater share of profits. The strategies employed have been various - demonstrations and blockades against oil facilities, occupations of oil installations, workers strikes, and legal proceedings by communities against the companies for ecological compensation. The occupation of the Warri area Chevron oil facilities in 2002 by Ijaw, Itsekiri and Ilaje women demanding company investments and jobs for indigenes reflected the tip of social dissatisfaction with the resource distribution. More contentious have been hostage takings, sabotage of pipelines - and what is referred to as oil "bunkering" or theft (from hot-tapping fuel lines to large-scale removal of crude from flow stations).

Over the last two months, however, there has been an escalation of violence and disruption that promises a further deterioration in political instability across the region. MEND - Movement for the Emancipation of the Niger Delta - has taken a series of hostages in the Delta region and battles between the Nigerian military and insurgents in the Delta have become bloodier. Among MEND's key demands were the release of two Ijaw leaders of note, the Ijaw being the largest and most vociferous minority group in the Nigerian Delta. On 29 January these hostages were released unharmed although the Ijaw leaders in question remained under arrest in Abuja, the Nigerian capital. By the first week in February MEND had contacted the Nigerian press directly, calling for the "international community to evacuate from the Niger Delta by 12 February, or "face violent attacks". Unlike small-scale community protest against Willbros in the 1990s, today's Niger Deltan militants threaten to destroy major oil facilities and their identities are known to neither the federal military nor the established Ijaw leadership. In the days following the renewed violence, prices of a barrel of oil increased by almost $1.50 as Shell and Chevron indicated that their production in Nigeria had been cut by over 15 percent. None of this is to suggest that disruption may not be profitable for some. The volatility surrounding oil installations in Nigeria, and elsewhere in the continent, is used by the US security establishment to justify foreign (and domestic) military presence in African oil producing states while contributing to the oil industry's windfall profits (for more on this see www.csis.org/researchfocus/Africa and www.heritage.org/Research/Africa/index.cfm). Yet the depth of resentments, and the military capabilities of insurgent groups armed in large measure through oil theft suggests that the oil companies' operations - what they call their social license to operate - may be in question. In the run up to what promises to be a bitter presidential election in Nigeria in 2007 there is potential for enormous political turbulence.

Insurgent groups like MEND provide one example of the weakening of the Nigerian polity from within. The leaders that MEND aims to protect, former governor Alameyeseigha (of Bayelsa State, the second largest oil producer in the federation) and insurgent leader Alhaji Asari, represent a threat to dominant forces in the Nigerian federation, which is largely controlled by elites from the west and the north of the country. Each also represents a different side of the 'failed-state' problem that faces Northern governments and corporations in their renewed interest in plundering African energy resources. On the one hand, are the apparently 'illiberal' practices of corruption and influence trafficking, represented by the former governor. Alameyeseigha was arrested in London in November 2005 on corruption charges. Following a remarkable bit of bail jumping, in which he apparently dressed as a woman and chartered a boat/plane from Cameroon, he returned to a hero's welcome in the Bayelsa State capital. Within days of his return he faced criticism from local state politicians and was subsequently arrested by the federal government on treason charges. Far from being the polar opposite of the former governor, the "legitimate" oil industry is in fact very similar. For instance, Halliburton's Nigeria activities have faced a corruption probe from French, British and Nigerian officials concerning an alleged payment of $180 million to secure a natural gas contract.

On the other hand there are popular insurgencies from below. Most visible is Alhaji Asari, leader of the Niger Delta People's Volunteer Force, whose stated aim has ranged from regional energy sovereignty to outright secession. To the US press and 'intelligence' community Asari is at the helm of an armed gang presiding over the illegal oil market. But locally, Asari is seen as a key leader in the struggle for resource control. From this perspective, the contraband trade is an attempt to wrest back oil profits through direct appropriation of crude, employing the language made popular by organizations like the Ijaw Youth Council in the late 1990s. Today, groups like MEND assert outright possession over oil profits. Yet the local militias armed themselves with oil industry monies in the form of 'standby' and 'security' contracts to unemployed youth when companies work on installations - a practice criticized by Human Rights Watch and now theoretically banned by Shell Nigeria (for more see hrw.org/backgrounder/africa/nigeria0205/). The growing presence of arms has created a sort of protection racket, one consequence of which is that the installations of oil multinationals are often safest when the Nigerian Federal military allows oil traffickers to go about their business without threat of interruption.

The security threat posed by the Nigerian militants contribute to the price increases that produce corporate windfalls. It also pushes the development of greater Nigerian offshore production capacity. 'Supply risk' assists the oil industry in lobbying for greater development of Nigerian and West African offshore reserves. There is an ongoing dispute over Nigeria's OPEC quota, which US and the Oil Majors wish to increase. Despite concerns about supply disruptions from the insurgency, Nigeria's crude production generally exceeds its OPEC quota. According to the US Energy Information Administration, the multinationals see this quota as the primary obstacle to increased production from deepwater fields. High prices provide a means of securing high profits until greater production is permitted. In mid February OPEC announced plans to increase the Nigerian quota in order to accommodate huge deepwater production facilities controlled by Shell and Chevron.

Supply worries caused by insurgents are a minimal part of the problem - ironically, the business press pointed out just this week that current high oil prices are accompanied by high supplies. The Financial Times cited Nigeria and Iraq as central sources of uncertainty in supply. Despite, threats to energy security, current oil inventories are actually plentiful. The US Energy Information Administration asserted that "high prices and high inventories will continue until spare capacity increases significantly across the entire supply chain, or many of the perceived uncertainties in the market are removed". Deepwater exploration in offshore West Africa is thus justified as one means of lowering world prices, in the context of the failure to gain Iraq and profound insecurities in the Persian Gulf. And developing the deepwater is accompanied by the militarization of the Gulf of Guinea - a move promoted by various Washington DC Think Tanks and now manifest in the increasing presence of the US European command off the West African Coast (for more see www.aei.org).

In the new scramble for Africa, the international human rights community has paid particular attention to the Chad-Cameroon Pipeline over the past five years. The CCP project was initially lauded by the World Bank as a counter to the so-called resource curse, which sees extractive resources and rapid injections of foreign currency as deepening impoverishment and corruption in many poor countries. The Chad-Cameroon pipeline aimed to avoid this curse by requiring that 80 percent of the profits from the project be invested in social development - a rather unlikely feat in the context of Chad's dictatorship. Initially estimated at $3.6 billion the costs of the project, heavily financed by the World Bank, were successively inflated. By late 2004, ExxonMobil, the lead operator, indicated that that the project had cost $4.2 billion dollars. In early 2006 the World Bank froze funds to Chad due its government recent change to the Petroleum Management Revenue Law requiring most income from the pipeline be dedicated to poverty reduction. In September of last year, Amnesty International released a report criticizing the basic terms of the project - arguing that it effectively prevents Chad and Cameroon from passing future social and environmental regulatory laws should they impede upon the profits of the key operators in the project - namely ExxonMobil (www.amnestyusa.org/regions/africa/). Once again, corporate profits remain the bottom line in a context of violence and poverty.

What then are the prospects for Nigeria and oil security? President Obasanjo is seeking to override the constitution in order to seek another term in office - which could lead to major inter-regional/ethnic conflict involving the West and the North alongside the minorities of the South. The danger is that the ongoing US militarisation of the region could increase the presence of mercenaries and paramilitaries, creating conditions not unlike those in Colombia. In February Nigeria appealed directly for China for military aid, citing that the United States was slow to support them in this area. In the US congress military aid to Nigeria is less popular, given stated concerns in the area of corruption and human rights - an area in which China shows less pretence. This hesitancy on the part of the US's elected democratic representatives is assessed coolly by security think tanks. On 27 February the Financial Times cited the Africa director at the Washington based Center for Strategic and International Studies, Stephen Morrison, as follows, "The Chinese are very competitive players and we have to come to terms with that. They are going to places that really do matter." The availability of arms to both government and insurgent groups has broadened access to the means of violence in the struggle for political power. In the Nigerian Delta, the disaffected make direct demands on the economic wealth and political power from which they are marginalized. Over the next twelve months the nature of these direct demands will be profoundly shaped by the tensions in the Niger Delta and the political turbulence of the Nigerian electoral cycle. In both the new scramble for Africa's oil resources, as with the Nigerian domestic electoral competition, the poorest local residents will assume only greater economic hardship and ecological devastation.

For more information, see:

Bichler, S. and Nitzan, J. (2004) "Dominant Capital and the New Wars", Journal of World Systems Research X, 2. 255-327

CSIS 2005 A Strategic US approach to Governance and Security in the Gulf of Guinea. Centre for Strategic and International Studies, Task report, July 2005, Washington DC.